Wednesday, January 27, 2010

The Business Times of Friday, 15 January 2010 10:53
BY ERIC TOROKA
A FULL Customs Union became a reality within the East African Community on January 1 this year ... And – as the Community hurtles into a Common Market regime that is tentatively slated to become operational come next July – activists in Tanzania have come to the fore in the fight for consumer protection in ways more than one.

In the looming advent of a Common Market, deliberate efforts need to be taken sooner than later to ensure effective protection of the interests of consumers as a whole.

Steps must also be taken to promote and enforce fair competition at the marketplace wherever and whenever possible, with the interrelated objectives of driving prices down, as well as improving the quality goods and services.

This should be in a win-win situation in which all stakeholders benefit: businesses and consumers in particular, and the economy at large.

The envisaged EAC Common Market – whose Establishment Protocol was signed by the Heads of State of the five EAC member countries in Arusha on November 20, 2009 – will come into effect across the entire Community on July 1, 2010... But only – and if only – the National Legislatures of the five States: Kenya, Uganda, Rwanda, Burundi and Tanzania ratify the Protocol in the interim.

In the event, certain quarters in Tanzania consider it prudent for the relevant authorities and economic moguls – including the Government and players in the private sector – to urgently put in place the requisite mechanisms for ensuring that Tanzania benefits maximally from the dual arrangements of a Customs Union and a Common Market.

Speaking to Business Times in an exclusive interview held in Dar es Salaam this week, the executive director of the Tanzania Consumer Advocacy Society (TCAS), Bernard Kihiyo, said Tanzania requires to identify, prepare and adopt a serious approach that would ensure smooth, 'mortise-and-tenon' entry of the country into what is a relatively new economic and financial regime.

"We are having a laissez-faire approach on very important issues and, as such, need to remove all barriers to creative thinking sooner than later,” Kihiyo said, further counseling against negativisms like “ 'the Customs Union, Common Market won't work;' 'we don’t have capital;' 'why change;' 'we can't get there;' 'we are better off as it is'; 'may be in 20-30 years to come...' As Mwalimu Nyerere always said: 'it can be done play; just your part,'" Kihiyo elaborated.

In his view, the executive director says, “Tanzania will certainly benefit a lot from the envisaged Common Market. For starters, the country has a considerable store of comparative advantages that include a phenomenal endowment of natural resources which the other member countries don't have.

“These include precious minerals, swathes of forestry and fisheries, livestock, water resources, large tracts of arable land; a reasonably good climate, human capital, and socio-political stability/security.

But, all that notwithstanding, he says, “there still is a real need for the Government in Dar to invest heavily in the country's infrastructure and logistics. Among these are the need to revamp and otherwise put in place transport and transportation (including port and warehousing facilities), state-of-the-art telecommunications, as well as stable and adequate utility supplies (power, water, etc).

“If we want to excel under the proposed Customs Union and Common Market conditions, we must also revamp the country's legal and other regulatory/procedural frameworks; hospitality industry facilities; insurance and financial services; a highly educated/skilled workforce, and many other supporting facilities,” he enumerated.

“ There is indeed a need to invest heavily in the quality of labour that can produce goods and services for the expanded, more competitive regional market. We need to train lots of service providers on the concept of consumerism so as to enable them
render excellent customer services as a matter of course.

“We have to establish good policies that allow businesses and consumers alike to enjoy in full the benefits of a Common Market.

"Our business entities must undergo transformation in the way they regard, handle and treat customers. The conception of who a consumer is in the business context has to be changed from one of what is now regarded as a 'human cash dispenser' into an essential element for the healthy existence of businesses. Such a transformation has far-reaching effect on the provision of goods and services to customers, so that the servicing of the requirements of customers will be at the heart of market philosophy in all sectors of the economy.

'Politically-motivated slogans won't get us far in the socio- economic developmental stakes... We must leave no loopholes for unscrupulous players to take unfair advantage of the Common Market at the expense of 126m East Africans.'

“Not only would knowledge and practice of this concept aid in
improving the provision of quality services that would, in turn, lead to increased success in business at the coming regional Common market; it would also spell greater success in the local market as well," Kihiyo stated.

Noting that the Common Market will bring together about 126.2 million consumers with a combined purchasing power of about US$60 billion, Kihiyo said this “will certainly stimulate economic growth for the entire region... However, a lot of changes must be made in the way business is currently done.

"This is a big market which no business worth its name can ignore. There will be free movement of persons, labour, goods, services, and capital. There will be rights of residence.

There will be fewer or no market restrictions against any registered/licensed business entity to conduct business in any of five member states. But the most critical question one has to ask is, how far prepared are consumers and businesses in the region to meet the challenges of the EAC Common Market – and, in the event reap to the maximum possible the benefits of the new regime," he said, adding emphatically that “the region must be looked at – and seen – as a Bigger Picture!”

For his part, the chairman for Consumer Society, Daimon Mwakyembe, told Business Times that "part of the reasons which led to the collapse of the former EAC in 1977 was ideological differences. This shouldn’t be the reason this time!”

Noting that the 'new' EAC was officially revived on July 7, 2000, Mwakyembe said “all the five EAC member states are practising free market economy whereby the prices of goods and services are determined in a free market pricing system governed by the laws of supply and demand.

“However, a Common Market alone may not guarantee outcomes that are efficient and in the public interest. In the real world, the benefits of a Common Market do not exist in pure form – due to human nature of greed,” he said.

Nonetheless, consumers are likely to benefit more in a Common Market that outside one, he argued.

"For one, there will be more business players competing for custom and consumers' money. Hopefully enough, there might be certain improvements in the quality of goods and services supplied at a reasonable and competitive market prices," he said.

Nonetheless, Mwakyembe – a former director-general of the Tanzania Bureau of Standards – said one main worry is likely to remain: how violations of consumer rights can be curbed within the Common Market...

“ As of now, consumer rights violation at the single country level are on the raise with the passage of time... The respective Governments seriously need to formulate and adopt legislation, mechanisms and programmes that are designed to effectively regulate, sensitize and popularize among the EAC citizenry
regarding their rights and responsibilities as we rush along
and into a Common Market in a matter of a few months,” the chairman counselled.

Mwakyembe admits that “remarkable efforts have been taken in Tanzania in recent years that led to the adoption of important statutes for consumer protection and regulation of a free market economy.”

This was accomplished with considerable cooperation and help in cash and in kind from the World Bank, the Tanzania Government and Parliament, as well as other stakeholders.

Others are the Tanzania Food & Drugs Authority Act (2003); the Bank of Tanzania Act (2006), “and many other written laws.”

Among the earlier ones are, of course, the Tanzania Bureau of Standards Act (1975, revised in 2009 – although not yet adopted!); and the Weights and Measures Act (1982).

Commenting upon the matter, a former director-general of the Small Industries Development Organization, Epaineto Toroka, said “there is also a need to have central bodies to regulate the Common Market if and when it comes into effect.

Noting that "the EAC countries already have so many bodies regulating labour, services, goods and rights of residence at the country level,” Toroka said “if we go into the Common Market, we will need to have central bodies to regulate it, too... Market weaknesses and loopholes within the EAC will need to be addressed and dealt with accordingly, as no one country can do it alone," Toroka stressed.

“The most appropriate way forward for the EAC member states is to go into a Common Market bloc. However, there must be intensive advocacy on what is the Common Market will all be about; what are the benefits in it for ordinary Tanzanians, Kenyans, Ugandans, Rwandans and Burundians – and what the disadvantages are!”

The PR, Media & Communications Manager for the Dar es Salaam-based Serengeti Breweries Ltd, Teddy Mapunda, told this write that, “if Tanzanians – and, indeed the other EAC members – really want to have a positive outcome in the coming years, beginning especially in 2010, then consumer protection within the Common Market must feature prominently in it...

“But this requires strong political will and commitment from those in power; they should undertake what we in the trade call 'consumer protection crusade' for the betterment of individual consumers, citizens and other stakeholders as a whole.

Noting that mere slogans – mostly politically-motivated – will not get us far in the socio-economic developmental stakes, Mapunda called for the powers-that-be “to make sure that there will not be loopholes which would enable unscrupulous players to take unfair advantage of the Common Market – and at the expense of 126 million East Africans.”

WASHINGTON, Jan 15 (Reuters) - Consumer groups urged the chairman of the U.S. Senate Banking Committee not to buckle to Republicans and bank lobbyists trying to kill the creation of an independent agency to protect Americans from risky financial products.

In an effort to win bipartisan support for a financial reform bill, committee chairman Christopher Dodd may scrap plans for an independent regulator to oversee mortgages and other financial products, sources have said.

The Consumer Financial Protection Agency (CFPA) is a central element of a financial industry overhaul that the Obama administration proposed last year. Watering down the agency would represent a major setback for the White House and big win for the slew of U.S. business groups that are firmly opposed to such a plan.

As reported by Reuters on Tuesday, support for the proposal is fast fading among committee members. [ID: nN12211768]"We urge Chairman Dodd not to cave to the big banks and their army of lobbyists who have made killing the CFPA one of their top priorities," said Heather Booth, the director of consumer lobbying group Americans for Financial Reform. "If the big banks win, the consumers will lose," she said in a statement.

Late last year, Dodd introduced a sweeping draft bill to regulate everything from banks to the $450 trillion over-the-counter derivatives market.Senate Republicans immediately rejected his proposal. Now lawmakers from both parties are negotiating the draft's most controversial provisions, such as the consumer agency and how to handle troubled financial firms.

Dodd, who as chairman of the banking committee is leading negotiations over the bill, may reduce the scope of the consumer agency and instead make it a division of a new systemic risk regulator or a new super-cop for banks, sources have said.Watering down the consumer agency could win Republican support for his entire financial reform bill -- a piece of legislation that Dodd could add to his legacy when he retires from the Senate at the end of the year.

INDUSTRY STILL WARYIndustry lobbyists remained wary of the potential changes. Opponents of the consumer group have said it will stifle financial innovation and raise regulatory costs. Meanwhile supporters say it is needed to protect consumers from dubious practices and products of financial services firms.

As proposed by the White House, and in the draft bill Dodd introduced last year, the CFPA would strip existing agencies such as the Federal Reserve of their consumer protection duties and centralize them in one organization.The U.S. House of Representatives last month passed a regulation bill that includes an independent consumer agency.

Consumer advocacy group Consumers Union also urged the Senate to preserve the new agency. "Consumers Union urges you not to allow these institutions to profit from their reckless behavior and then destroy any hope for legislation that would protect consumers from the kind of abusive financial practices that helped trigger our current economic crisis," the group said in a letter to U.S. senators. (Reporting by Kevin Drawbaugh and Rachelle Younglai; Editing by Tim Dobbyn) Source; http://www.reuters.com/article/idUSN1521623920100115

Households in £82 million debt to illegal lenders after taking out doorstep loans to fund ChristmasLaura Whateley More than 100,000 of the UK’s poorest families will be crippled with £82 million of debt this year, after borrowing from loan sharks to fund Christmas, research has found.

Families took out an estimated £29 million in illegal doorstep loans over the festive period, at an average of nearly £300 per household. With interest rates on illegal loans averaging 825 per cent, households can expect to pay back over £800 during 2010. This suggests many families will still be paying off their debt next Christmas.

The Real Cost of Christmas report, authored by the think tank the Financial Inclusion Centre, was commissioned by Circle Anglia, an affordable housing provider, after it noticed an increase in the number of its residents being targeted by loan sharks. The report also found that the number of people using loan sharks has grown over the last three years from an estimated 165,000 to 200,000 a year in 2009, a 22 per cent rise.

Andy Doylend, of Circle Anglia said: “These figures are very concerning and demonstrate the scale of illegal lending across the UK. We hope that by turning the spotlight on loan shark activity we can help more people to seek help and get sound financial advice.

Related Links• Low-income borrowers turn to loan sharks • Loan sharks forced family into prostitution “A simple step such as borrowing from a credit union or a community finance organisation instead of a loan shark could have saved the typical low income household £500 in debt repayments- more than enough to fund the whole of Christmas 2010 as well.”

Separate research carried out by Wherry Housing Association in Norfolk found that one in four tenants had been offered a cash loan. But 5 per cent said they were not given any paperwork showing how much they had borrowed or how much they owed, while 9 per cent said the amount they owed kept growing even through they made repayments and 3 per cent said they had been threatened with violence when they could not repay the money.

Faisel Rahman, of Fair Finance, the ethical lender, said: “Millions of pounds are being taken out of the pockets of the poor by illegal and extortionate lenders every year. As the credit crunch continues, more people are being left behind by mainstream financial services. This, coupled with the downturn on the economy, means 2010 promises to be a very difficult year for low income and vulnerable communities.”

Those who have borrowed money from a loan shark are under no legal obligation to repay the debt, which is why loan sharks often resort to violence and intimidation to force borrowers to pay up.

The Government has created specialist teams at Trading Standards to tackle illegal money lending, which Kevin Brennan, the consumer minister, said has already helped more than 10,000 loan shark victims write off £30million of illegal debt. He said: “I’d encourage anyone who feels trapped by a loan shark to get help and advice as soon as possible.”

The Trading Standards Illegal Money Lending team offer a 24 hour confidential hotline on 0300 555 2222 for anyone who has been targeted by a loan shark, or believes illegal lenders are operating in their community.

Thursday, January 7, 2010

The Fair Competition Commission (FCC) wishes to confirm and clarify the statement made by the Honourable Prime Minister, Mizengo K. P. Pinda (MP) in the Parliament while responding to the impromptu question by Busega MP, Dr. Raphael Chegeni (CCM) Member of Parliament for Busega on Thursday, 29th October, 2009, as reported by the media. The question by the Honourable Member of Parliament was whether the Government was aware of the on-going beer wars between Tanzania Breweries Limited (TBL) and Serengeti Breweries Limited (SBL) and what the Government was doing to prevent the continuation of the nasty acts between the two.

The FCC wishes to confirm the answers by the Honourable Prime Minister that the Government is aware of the wrangle and that the FCC, which is the appropriate institution for dealing with competition issues, is handling the problem.

A. THE WRANGLE BETWEEN TBL AND SBL IS AT THREE LEVELS:1. TBL and East African Breweries (EABL)In 2002 TBL and EABL agreed to divide up the beer market between Kenya and Tanzania so that they do not compete in their respective areas of dominance. This union was blessed by Government even though there was no merit except that of monopolizing their respective markets. As a result of that union, there ensued many negative effects: Kibo Breweries Limited closed down with employees in excess of 800 being made redundant in Moshi; TBL had about 96% of the Tanzania beer market and the consumer had to suffer several increases of beer prices.

Meanwhile, SBL, which had about 4% of the Tanzania beer market share, was increasing their production capacity. At the moment they have about 16% of the Tanzania beer market which is nearly the market share which Kibo Breweries Limited held before they were closed down.

2.SBL and EABLEABL and SBL have been trying to enter into agreement which is similar to the TBL/EABL agreement. The attempted EABL and SBL has been the bone of contention between TBL and EABL. This dispute is being dealt with outside Tanzania.

3.TBL and SBLSBL through their advocate filed a complaint against TBL with FCC in September 2009 accusing the latter for abuse of dominant position in the market. Upon receipt of the said Complaint, FCC immediately wrote to TBL attaching SBL’s Complaint and requesting them to respond to SBL’S allegations. TBL through the services of their Advocates responded to the allegations.The FCC is still investigating the facts of the case. However, this is a matter pending before the Commission and therefore, under the sub-judice rule, it will not be proper to comment on it as this will interfere with the judicial process.

Suffice is to state that once the case has been determined, FCC will give a statement of the facts and whosoever is aggrieved with the decision of the Commission will be at liberty to appeal to the Fair Competition Tribunal.

B. REMOVAL OF SBL ADVERTISEMENTSThere is another important issue, which FCC wishes to clarify as matter of urgency. This is about the removal of SBL advertisements or anybody’s advertisements for that matter.

The unlawful removal of advertisement in public place is a destruction of somebody’s property. This is an offence under the Penal Code Act (Cap 16 Re 2002).

Section 326(1) of Penal Code states as follows:- “any person who willfully and unlawfully destroys or damages any property is guilty of an offence, which, unless otherwise stated, is a misdemeanor, and he is liable, if no other punishment is provided, to imprisonment for seven years.”

This is a criminal offense which is penal and should not await the FCC determination of the competition issue. Therefore the unlawful removal of advertisement should be reported to the appropriate authorities and the necessary action taken immediately in order to maintain peace and order in society.

C.ROLE OF CONSUMERFurther, it is important to state here that the Tanzanian beer consumer has a role here. What is being fought here is their custom. Consumers have the right to choose and the obligation to make their views heard through their respective consumer associations/organisations and thereupon take up the challenge of defending their right to choose the beers of their preference in the marketplace.

Therefore it is upon them to decide who is serving their long term interests, the one who is allowing the last consumer to choose what to drink or the one who is curtailing even the display of goods for consumers to choose.

D.ROLE OF WHOLE SELLERS, DISTRIBUTORS AND RETAILERSThe whole-sellers and beer retailers also should show leadership and genuine service to consumers. They should not accept monetary incentives not to stock competitors’ products when they know by so doing they are annoying some of their consumers and also are helping to break the law.

E.THE ROLE OF COMPETITION IN A MARKET ECONOMYThe ultimate goal of effective competition in the market is to enhance efficiency at all levels of production and distribution of goods and services. It is through competition that prices, services and consumer choices can be assured. Also it is through competition that innovation in production, distribution and management is automatically generated. Therefore, any efforts which curtail competition pressure in a given economy affect sustainable development of that economy. Such efforts affect even the sustainability of Government revenues. In short the social welfare is highly compromised. Tanzanians need not go further to learn the effects of rampant monopolies in the economy because that is where we have just come from.

Business community should strive to serve the wider consumer interests and uphold to competition rules rather than inclining to serving the narrow interests of the competitors.

The choices of consumers strongly affect business behavior and their products. Consumers respond negatively to corporations involved in malpractice.

Wednesday, January 6, 2010

On my behalf and on behalf of everybody at Tanzania Consumer Advocacy Society (TCAS. I would like to convey to you personally, a warm new year greetings and regards from our entire TCAS family.

We thank you very much for being TCAS’s supporter, as you stood by our side as we faced challenges and victories, battles and successes. Without your support we could not continue to fight and work for a good course in favor of Tanzania Consumers and world at large.

Thank you for making year 2009 a memorable one. We are looking forward to celebrate many more successes in 2010.

Holidays are over; business as usual in 2010. Let us all strive to compliment government's efforts on improving the situation of consumers all around Tanzania and the world at large.

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About Tanzania Consumer Advocacy Society

Tanzania Consumer Advocacy Society (TCAS) is a private, voluntary, non governmental, non partisan and non profit making organization that was registered in July 2007 under the Companies Act of 2002, Chapter 212 of the law of Tanzania as a company limited by guarantee.
Our Vision;-
TCAS’s Vision is a Tanzania where consumers are aware of their rights and have ability to claim their rights. Where markets are accountable and more responsive to consumer’s needs and interests.
Our Mission;-
To provide advocacy platform that would make consumers voices heard, raise consumer’s awareness of their rights, build consumer’s ability to claim their rights and make markets accountable and more responsive to consumer’s needs and interests.